HKEX & MSCI to Launch Futures Contracts on MSCI China A Index

The new contracts are expected to launch around November 2019.

Hong Kong Exchanges and Clearing Limited (HKEX) announced this Monday that it has signed a license agreement with MSCI Inc. to, subject to regulatory approval, introduce futures contracts on the MSCI China A Index.

As China’s financial markets continue to open, demand for mainland China investment opportunities continues to grow. The MSCI China A Index will consist of 4,211 large and mid-cap A-shares, on a pro forma basis, the statement said.

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The shares will be accessible via Stock Connect following the completion of MSCI’s inclusion process in November of this year. Once this is completed, the MSCI China A Index will become part of the A-share portion of the MSCI Emerging Markets Index.

Since the launch of the Shenzhen-Hong Kong Stock Connect in 2016, HKEX has been working to improve the connection to China’s Mainland equity markets for foreign investors, who have historically had limited access to the market.

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MSCI and HKEX to Develop Risk Management Tool for Investors

Charles Li, Chief Executive of HKEX
Charles Li
Source: HKEX

Commenting on today’s announcement, HKEX Chief Executive Charles Li said: “This new agreement with MSCI will facilitate the development of a key risk management tool for international investors who need to manage their A-share equity exposure.”

“The international trading community has wanted a product like this for some time, and HKEX’s MSCI China A Index futures contracts will directly address their needs,” Li continued.

Henry Fernandez of MSCI Inc
Henry Fernandez
Source: MSCI Inc

Adding to this, Henry Fernandez, Chairman and Chief Executive Officer at MSCI Inc., noted: “With the evolution and sophistication of China’s securities markets, we continue to see increasing participation of global investors who are demanding tools to enhance their risk management capabilities.” 

“Having been at the forefront of index construction and maintenance for global investors for 50 years, MSCI is pleased to bring that expertise to the China market and to be selected by HKEX as they bring this innovative development to the global investment community,” Fernandez concluded.

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